Summons to Vijay Mallya in Kingfisher Airlines TDS case

Written by fe Bureau | Bangalore | Updated: Feb 7 2014, 14:24pm hrs
Vijay Mallya-Kingfisher AirlinesVijay Mallya-promoted Kingfisher Airlines has been grounded since October 2012 and has not paid its employees for over a year.
The Special Court for Economic Offences in Bangalore on Thursday ordered summons to be issued to Kingfisher Airlines and chairman Vijay Mallya in cases filed by the Income Tax (I-T) department against the airline for allegedly not remitting the tax deducted from employees' salaries.

The development comes three weeks after the Karnataka High Court rejected Mallya's plea seeking the quashing of proceedings in these cases.

The I-T department had filed three cases with the Special Court for Economic Offences in 2013 in connection with the airline's failure to remit tax deducted at source (TDS) for three consecutive financial years beginning 2009-10.

The department has claimed TDS of around R400 crore from KFA, which is disputing the quantum of the tax demand.

Mallya had approached the Karnataka High Court in August 2013 seeking quashing of these cases.

On January 18, 2014, while passing its order, the high court noted that criminal proceedings were not dependent on the recovery proceedings and that quantification of the amount for the purpose of initiation of criminal proceedings was not necessary. The high court had also declined to accept the airline's contention that treating Mallya as the principal officer of the company for the purpose of initiating criminal proceedings was contrary to law.

Kingfisher Airlines has been grounded since October 2012 and has not paid its employees for over a year, even as it is fighting winding-up petitions filed by creditors.

In recent months, the Karnataka High Court has admitted two of these petitions, one filed by UK-based aviation services firm Aerotron and the other by a consortium of banks led by State Bank of India (SBI) which is looking to recover loans of R6,203 crore. The airline has told the high court that it is in the process of finding an investor in order to revive operations.

In December, the I-T department also asserted its primary claim on the company's assets by saying that Kingfisher House, the airline's Mumbai headquarters, had been attached under the Income tax Act 1961.

This property, along with Mallya's villa in Goa, was among the collateral given to the SBI-led consortium which has also begun the process for taking possession under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act.